While Pennell was in need of a job after not being brought back following a season as interim head coach with the Wildcats he had options. When he accepted the position with Grand Canyon, it appeared he was just looking to stay close to home and decided to coach at the sleepy central Phoenix university. What he actually did was accept the opportunity to serve as the central figure for behind an ambitious expansion plan at a potential sleeping giant.
"It is humbling that they would target me to do that and I understand that responsibility and take it seriously," Pennell said. "No one wants to win more than me, so I don't feel that added pressure. I hope not just to help our program, but the other sports. If they target basketball to be the beacon light, we'll wear that moniker proud."
Hiring Pennell garnered plenty of media attention, but the move was just the latest step toward executing a plan that was already underway for a couple of years. But in order to understand the present and future, you need to understand the past.
A quick history lesson
Grand Canyon University has been in existence since 1949. Until 2000, the institution existed as a Baptist-affiliated university before shedding that to become a non-denominational Christian university. The athletic program enjoyed a lot of success during the 70s and 80s, winning multiple national championships in multiple sports. Their basketball program was nationally recognized and attracted enough talent to hang with their big brothers at ASU and Arizona. In fact, the program boasts 22 players who reached the major leagues including Tim Salmon and Chad Curtis.
However, as the university began to suffer financial problems in the late 1990s and into the new millennium, many programs suffered declines including their athletic programs. In December 2003 Grand Canyon found itself $15 million in debt, with its student population reduced to only 1,500. Enrollment had declined for five straight years. The school had 30 days to make good on its obligations or it would have to file for bankruptcy. Then, seemingly out of nowhere, Grand Canyon University received its savior when it was bought by Brent and Chris Richardson, just three days before the university was to file for bankruptcy.
"These folks came on campus and we thought they were consultants," said Athletic Director Keith Baker. "It turned out they wanted to buy the university."
No one knew it at the time, but the Richardsons weren't just scooping up an asset at a discounted price. They came in with an ambitious vision for a unique business model.
Getting their man
When Brent Richardson bought Grand Canyon University, he had more than 20 years experience in education and served as a CEO for a company that provided online educational programs and marketing services to several regionally and nationally accredited universities. He was also familiar with how the University of Phoenix built a juggernaut in online adult education. Upon buying Grand Canyon, Richardson immediately converted it to for-profit status and installed himself, a non-academic, as chief executive officer. He then implemented an online model similar to the University of Phoenix at Grand Canyon University and complemented it with the existing ground campus.
After two years, the online student enrollment grew to 18,000 and the time was right to take the university public. However, Richardson had no experience with Initial Public Offerings (IPOs), so he sought out someone who did. The logical target was the architect behind the growth at University of Phoenix, its president Brian Mueller. During his tenure in charge of the online program, Mueller grew enrollment from 3,500 students to 340,000. Today the University of Phoenix is approaching 400,000 students with annual revenues of $4 billion. He also brought the parent company, Apollo Group, public and the stock became a Wall Street darling.
Mueller wasn't looking to leave Apollo Group when he was contacted by Richardson but at the same time he recognized that Grand Canyon was the only privately owned traditional university in Arizona. Most states have many. That unique status provided Mueller the opportunity to implement a plan that would put a unique twist on the online business model that was in its infancy at Grand Canyon. Mueller envisioned building Grand Canyon's on-campus experience by providing all of the features at a standard university. That would not only help build the student enrollment on the ground campus but provide something tangible with which online students could form a bond.
"Working adults have a chance to affiliate with a traditional university that has a thriving academic community on a local campus with all the trappings of what people typically expect should be at a university," Mueller said. "That means having traditional age students who live in dorms and apartments, a full-time PhD faculty, music, theater, art and especially athletics. The chance to affiliate with that as a working adult is a more powerful thing than to be a part of a university that is just in cyberspace only."
To execute the plan, the owners and Board of Directors needed to agree with Mueller's vision and provide the proper funding to execute it. All parties agreed, so Mueller left the University of Phoenix and joined Grand Canyon University as its CEO in June 2008.
The IPO hit the market in November 2008 during the throes of the recession and raised $126 million. Grand Canyon now had the unique distinction of being a for-profit, privately owned, publicly traded university. Shares of the stock (ticker: LOPE) opened at $12 and have since climbed above $19 and are approaching an all-time high. The revenue provided a significant war chest and enabled Mueller to put his plan in motion.
Expansion plans
Athletic Director Keith Baker has seen it all during his 30-year affiliation with Grand Canyon University. As a student athlete, he pitched on Grand Canyon's first three NAIA national championship baseball teams in 1980-82. He is the last pitcher in Antelopes history to throw a no-hitter, doing so on March 11, 1982 in an 8-0 victory against Nebraska Wesleyan University.
He graduated in 1982 with a double major in business administration and communications and has held multiple positions in the athletic department. During his 26 years in sports administration, Baker has served as the school's sports information director, men's golf coach, women's volleyball coach, assistant athletic director and almost 19 years as athletic director. He's even served as the Antelopes play-by-play announcers. Few have witnessed the highs and lows at the university from a better seat than Baker.
When new ownership took over, Baker was relieved the university would stay open but he was also concerned about the future of athletics at Grand Canyon.
"There were doubts for the first few months if we were going to stay around because intercollegiate athletics at the Division II level isn't really part of a for-profit model," Baker recalled.
Under new ownership, the athletic department still faced challenges with limited scholarship and resources although there were also new sports programs added. Mueller made athletics more of a focus as part of his plan to rebuild strength in the Grand Canyon brand by stressing a return to excellence that was established in prior years. He increased scholarships each year and this year will make available $376 million worth. Four teams are offering the maximum number of athletic scholarships allowed under the NCAA. Under new ownership, the number of sports programs has nearly doubled growing from 10 to 18.
"We were in a mode of growth for so long that we weren't concerned with wins and losses but we are changing focus a little bit," Baker said.
There are also big plans regarding the sports facilities on campus. A complete renovation of the inside of the gym is currently underway. There are also plans for a new field house, which will not only provide a new facility for the wrestling and volleyball programs but create much-needed office space for coaches and additional locker rooms along with a new weight room. They would also like to add an instructional indoor facility next to the baseball facility with the hopes of attracting thousands of local junior high and high school baseball players, and a turf practice facility for the soccer and lacrosse teams.
However, the crown jewel is a planned 5,000 seat event center. Not only will it provide a first-class facility for the men's and women's basketball programs, it is expected to fill 200 days with other events, such as secular speakers and concerts. The thought is that by hosting so many events, the facility will also serve a marketing purpose. Thousands of potential student athletes and adult online students will be exposed to Grand Canyon University at each event and Mueller hopes some of them will enroll either online or on campus. Discussions with architects are in progress and plans are being drawn on four facilities. Mueller would like to break ground by the end of the year and have the event center ready by fall 2011.
Going Division I
The additional sports, the added scholarships, and the new and renovated facilities all form a foundation for Mueller's ultimate goal; for Grand Canyon to become a Division I athletic program. The university made an upward move in the early 90s from NAIA to Division II. Mueller plans to climb to the top rung of the NCAA ladder and these steps are preparation for the move.
Several reports stated that Grand Canyon has already petitioned to make the move. Those reports are incorrect as the NCAA currently has a moratorium on accepting new programs into Division I until June 2011. One development that is expected to come out of the moratorium is that the NCAA will require universities to have a commitment from a conference before submitting a petition. There are currently a number of universities who moved up in recent years and are still independent.
Mueller has engaged in preliminary discussions with West Coast Conference Commissioner Jamie Zaninovich to begin determining if each entity would be a good match for the other. Zaninovich said the WCC is exploring the possibility of adding to its eight-team conference and plans to make a decision next summer.
The WCC includes such schools as Gonzaga, St. Mary's and Santa Clara and appears to be a perfect match for Grand Canyon based on the conference's criteria.
"Any expansion candidate must be an elite, private, faith-based institution that is geographically friendly to our other western-based schools," said Zaninovich. "The university must also bring something competitively to the men's basketball programs, which are so important to our league."
It's that focus on basketball that has provided a model for Mueller to emulate. A former high school and small college basketball coach himself, Mueller loves the game. He sees universities such as Gonzaga, Marquette and Xavier as examples of how an athletic department at a faith-based university can thrive with men's basketball as its primary program.
At one point, football was considered at Grand Canyon, but much like the aforementioned schools, it was determined that the sport would be a drain on the university's resources and jeopardize the other programs.
Net Gains
That brings us full circle as to why Grand Canyon might make a significant investment to hire Russ Pennell as head coach of its men's basketball program. Before Grand Canyon can find a Division I conference to accept it as an expansion candidate, the university must first establish a winning track record at its current Division II level. And in order to attract a coach like Pennell, the university had to show a commitment to putting resources into the program. That includes improved facilities and the additional scholarships, which are vital for Pennell to recruit the players he needs to win. And when the men's basketball program wins, all the athletic programs at Grand Canyon will win too.
Since taking over, Pennell has rebuilt the men's basketball program. All of the returning players from last year's team tried out to play for Pennell this season but none of them made it. Instead, Pennell signed seven Division I transfers and signed three freshmen who all received Division I offers. Pennell credits the full scholarships for luring the players and the fact that they don't have to sit out a year when transferring to a Division II school.
"In essence, we have a Division I team," Pennell said.
Any success enjoyed by the men's basketball team would dovetail nicely with the other recent successes by other programs. The women's basketball team has won the last three conference championships, the men's volleyball team is entering the Midwestern Intercollegiate Volleyball Association after playing as an independent in its inaugural season, and like the lacrosse team, has the entire state of Arizona to itself for recruiting locally. However, while it is great for the other programs to succeed, it is the men's basketball program that will lead the way if Mueller is to meet his goal of increasing Grand Canyon's online student enrollment from its current 24,000 to 80,000 in four years. If he reaches that goal, Grand Canyon would surpass Arizona State University in total students.
"If we are just very good at the Division II level and do it with 80 percent Arizona athletes, we will get a marketing return," Mueller said. "I think our little gym that sits 2,400 will be a tough ticket this year. If we are lucky enough to get to Division I and can fill a 5,000-seat arena and reach the NCAA tournament, then you have a story. Here is a university that five years ago was about to go under and now we are on the national stage."
It certainly would be a true corporate rags-to-riches story if Mueller and his team can build Grand Canyon University into an education juggernaut. He has surrounded himself with many former University of Phoenix executives to help accomplish his goals. And while it may seem like a long shot from afar, don't bet against it happening. Mueller has done it before and with people such as Russ Pennell leading the way, he plans to do it again.
Sports Arizona
August 2009
